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Georgia Oil and Gas Limited
GOG Licenses in Georgia & Their HC Potentials Tbilisi April 2018
Confidential
[ 2 ] Confidential
CONTENTS
Executive Summary. GOG Company Introduction & Assets Overview 3
Geology & Tectonics of Georgia & GOG’s Blocks 15
Source Rocks, Hydrocarbon Generation Histories & Reservoirs in GOG’s Blocks & Kura Basin 31
Trap Types & Hydrocarbon Potential in GOG’s Blocks 54
Existing Fields Analogs 56
– Samgori Field 56
– Patardzeuli Field 57
– Norio Field 58
– Ninotsminda Field 59
GOG Blocks’ Prospects Leads 60
– Block VIII 60
– Block XIF 71
– Block XIG 74
– Block XIM 78
– Block XIN 85
GOG’s Forward Exploration Program 90
[ 3 ] Confidential
Executive Summary
GOG Company Introduction &
Assets Overview
Niko Tevzadze Chairman of board
[ 4 ] Confidential
■ Gained independence from SU in April 1991; WTO member since June 2000.
■ Parliamentary democracy
■ Signed the association agreement with EU in 2014
Key Statistics
LT Foreign Credit Rating
S&P/Fitch: BB-, Moody’s: Ba3
GDP Per Capita US$ 3,854
Inflation Rate 1.8%
GDP Growth Rate 2.7%
Unemployment Rate 11.8% (2016 est.)
Population 3.7 million
Land Area 69,700 km2
Major Industries Tourism, Agriculture, Wine,
Energy, Machine Tools, Mining, Chemicals.
Nearby oil and gas pipelines (operated by BP)
1) AIOC Early Oil Pipeline (830km), runs from Caspian Sea in Azerbaijan (Baku Port), to the Black Sea (Supsa Port),
2) Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline (1,760km) runs from the Caspian Sea to the Mediterranean Sea.
3) Trans-Anatolian Gas Pipeline TANAP that will supply gas to Central Europe
Republic of Georgia - Overview
[ 5 ] Confidential
Georgia Oil & Gas Industry Highlights
Excellent potential for Conventional Oil and Gas and Shale Oil and Gas resource plays
• Well known geology (similar hydrocarbon plays as in North Caucasus and Caspian Region)
• Under-explored and under-developed with no discoveries since 1974
‒ Very limited use of modern technologies (3D seismic, directional drilling, horizontal drilling and stimulation)
• 80’s peak production of 70,000 BOPD just from the Samgori field (Middle Eocene), with total cummulative production up to date of 203 MMBBls of oil (still producing)
‒ High potential Conventional Oil and Gas plays (Miocene, Middle Eocene, Lower Eocene, Cretaceous, Jurassic)
• Shale Oil and Gas Potential are proven by regional source rocks (Maikop, Upper Eocene and Jurassic)
‒ Currently wells are producing Conventional Oil with little gas from fields discovered during SU era, but no exploration has been carried out to produce Shale Oil or Gas
Positive petroleum legislation & regulations
• Stable, simple, transparent & investor friendly Production Sharing Contracts
• No taxes on oil export
‒ At the moment oil is selling at a $10 discount to Brent at railroad terminal
‒ Imported gas price at the border of Georgia is $150 for 1000m3 (retail in Georgia is $230 per 1000 m3)
In 2017 Schlumberger acquired license blocks in Georgia, which can develop service infrastructure in country (what was missing for the last 25 years)
[ 6 ] Confidential
Possibility of discovery of two biggest oil and gas fields in Georgia
2018-2022 work program (180 US$ million) can prove 2P reserves in two resource plays of Blocks XIM & XIN with 1.372 US$ billion NPV@15%:
– Norio Deep prospect with 250 MMbbl prospective resource of light oil with 882 US$ million NPV@15% and 77% IRR
o Annual oil consumption of Georgia is up to 9 MMbbl
– Trani lead with 51 Bm3 prospective resources of wet gas with 490 US$ million NPV@15% and 67% IRR
o Annual gas consumption of Georgia is 2.2 Bm3
STAGE 1 (20 US$ million)
• 2018 work program (4.5 US$ million) can increase chance of success of the projects
– up to 20% for Block XIM
– up to 15% for Block XIN
• 2019 3D seismic work program (20 US$ million) can increase chance of success of the projects
– Blocks XIM up to 35%
– Block XIN up to 30%
STAGE 2 (150 US$ million)
• Bringing industry majors for farm-in:
– 2020-2021 three wells drilling program (75 US$ million) to prove 2P reserves of Block XIM
– 2022 three wells drilling program (75 US$ million) to prove 2P reserves for Block XIN
Discoveries of Norio and Trani fields might meet demand for a 25-year oil and gas consumption in Georgian Republic
Государство принимает участие
[ 7 ] Confidential
History of Oil & Gas Industry of Georgia
• Georgian Oil did not own the oil; it was funded for capital programs (mainly drilling) from the Ministry of Oil and Gas of Soviet Union; which declined after 1986
• Limited knowledge & technology – it wasn’t possible to explore for fracture permeability and to increase number of commercial fields
• Sharp drop of production (because of waterization of fractured reservoir), reduction of financing after 1986 and political changes in Georgia created at least a 10 year gap (1986-1996) in exploration programs
Over 1.2 billion USD have been spent since 1994 without any exploration success or increase of production
• Due to low oil price in 1990s first investor Companies were running projects with limited funds (limited seismic, limited studies) and performing risky E&P drillings
• In 2005-2015 new investors got more divided license blocks and performed more seismic programs within their blocks and very limited drilling
• In 2017 Schlumberger acquired one production and two exploration blocks in Georgia, which can develop service infrastructure in country
• Within tens of investors through the last 20 years period only two of them had background of being E&P companies
State Oil company “Georgian Oil” (one license owner)
Private investors (dividing Georgia into big number of small license blocks)
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bopd
Year
Coming of new investors by new tendering
First investments at average oil price $25
Exploration for gas was very limited in Georgia due to selling challenges until 2005
15 commercial and non-commercial oil fields were identified in Georgia and 95% of production relates to Middle Eocene fractured reservoir of Samgori fields (Patardzeuli, South Dome, Ninotsminda, Teleti)
203 MMbbls oil have been produced in total
Reduction of investments
Exploration for geological plays similar
to North Caucasus
M. Eocene Fractured reservoir oil
Financial Gap
[ 8 ] Confidential
History of Oil & Gas Industry of Georgia
VIII XIG
Baku-Supsa oil pipeline
BP Operated Baku-Tbilisi-Ceyhan
oil&gas pipeline
License owners
Schlumberger XIB, IX, X
Georgia Oil & Gas Ltd. Satskhenisi, Martkopi, N.Satskhenisi, VIII, XIF, XIM, XIN, XIG
Block Energy Norio, Satskhenisi
CanArgo XIC, XID, XIE, XIII
Frontera Resources XII
Vectra Resources VIIB
Elenilto Group LLC XIH
VM Group (Chinese) V, VIA, VIB
Stratigraphy Oil, MMbbl
Associated gas, MMm3
Free gas, MMm3
Middle Eocene 188.8 2634.6 539.2
Pliocene 9.78 2.86 13
Middle Miocene 1.87 1.10 –
Upper Eocene 1.20 12.56 –
Lower Eocene – – 33.34
Upper Miocene (Sarmat) 1.14 0.87 –
Oligocene-Lower Miocene (Maikop) 0.55 3.40 –
Upper Cretaceous 0.17 – –
Upper Jurassic 0.01 – –
Paleocene 0.00 – –
Total 203.5 2655.4 585.5
Total production from Georgian fields • Before 1974 (discovery of Samgori field) exploration was going for Middle Miocene and Cretaceous formations at shallow depths.
• Since 1974 main exploration targets have been Middle Eocene, Upper Cretaceous and consequently for Upper/Lower Eocene, Upper Miocene and Oligocene at maximum depths of 3,500-4,000 m.
• Very little exploration was done for deep Middle and Lower Eocene, Cretaceous and Jurassic (since 1990 only three 4500-5000 wells were drilled).
– oil production – gas production
[ 9 ] Confidential
GOG’s Team and Management
Mr Niko Tevzadze MSc
Chairman & President Over 30 years of technical, operational and senior management experience throughout Georgia, Russia, Kazakhstan,
Tajikistan. (1986 – 1990) Georgian Oil (state owned company) - Chief of Operations, (1991 – 1993) Georgia British Oil
(Operating Company) JKX Oil & Gas Plc, (1996 – 2005), CanArgo Energy Corp - Chief of Operations.
Mr Vakhtang Sakvarelidze
Director, CFO Over 30 years experience in Georgia with a wide range of upstream oil companies. Previous positions include, CFO at
Georgian Oil, CFO CanArgo Georgia and now CFO at Georgia Oil and Gas Limited.
Ms Mariam Bedoshvili
Director Over 25 years of Corporate Governance and organizational experience in the Georgian Oil and Gas Industry.
Dr. Mehmet Arif Yukler
Chief Advisor for Exploration Over 40 years experience in the international oil & gas industry, and has advised companies and government entities
of all size from small caps to super-majors, as well as state regulatory authorities on the management of resources and
exploration areas. Has worked in and studied all the known hydrocarbon bearing basins of the world. Dr. Yukler has
been involved in petroleum operations in more than 35 countries. Credited with more than 80 oil and gas finds.
Mr Guram Maisuradze
Operations Manager Over 15 years operational experience in Georgia, UK/North Sea, Republic Of Yemen, Egypt, Ivory Coast, Ghana,
Equatorial Guinea, Azerbaijan and Ukraine. Prior to joining GOG Guram worked in the UK for Qserv in engineering
support for their international operations and prior to that for CanArgo as an engineering coordinator.
Mr Artem Sanishvili
Chief Geophysicist 42 years of experience in oil and gas around the globe, working with companies such as BHP, Schlumberger and China
National Petroleum Corporation. Held a position for over 20 years at the Georgian Oil Department rising to head of
geological department. Worked in JKX, CanArgo, Frontera, Ramco and GOG as a database manager.
Mr Alexander Janiashvili MSc
Chief geologist Over 12 years experience within oil and gas. Has held a number of senior technical positions within Russia and Georgia
and is highly experienced in the fields of geological modelling, estimation of reserves, petrophysical modelling and
reservoir evaluation.
[ 10 ] Confidential
GOG Licenses
VIII XIG
Baku-Supsa oil pipeline
BP Operated Baku-Tbilisi-Ceyhan
oil&gas pipeline
• Block VIII – the border between Blocks VIII, IX, XIM, XIC and XIG goes over overlap zone between Kura Foreland basin and Lesser Caucasus, which extends up to 45 km along the border (based on seismic and gravity data) with similar geological plays in Jurassic, Cretaceous, Middle Eocene and Upper Eocene.
• Block XIF and XIG have similar geological plays for Upper, Middle and Lower Eocene, and Cretaceous as in the neighboring Block XIB.
• Block XIM has similar geological plays for Middle Eocene, Upper Eocene and Maikopian formations as in CanArgo Block XIC and Schlumberger Block XIB.
• Block XIN has no seismic data, but it is still considered to have Middle Miocene, Maikopian, Upper & Middle Eocene and Cretaceous potential next to Schlumberger Blocks XI and X.
GOG blocks Area, km2
Norio, Satskhenisi, Martkopi, North Satskhenisi
75
XIA * 700
XIM 350
XIN 290
VIII 4800
XIG 300
XIF 37
TOTAL 6552
* Block XIA was returned back to State in August 2017
The joint study is initiated by SAOG and GOG to explore conventional plays of Cretaceous, Middle/Lower Eocene and Jurassic and source rock play of Jurassic, Upper Eocene and Maikop.
License owners
Schlumberger XIB, IX, X
Georgia Oil & Gas Ltd. Norio, Satskhenisi, Martkopi, N.Satskhenisi, VIII, XIF
Tethys Petroleum Ltd. (49%) XIM, XIN
Skyland Petroleum Ltd. (20%) XIG
CanArgo XIC
[ 11 ] Confidential
GOG is the Operator and Contractor Party for 9 PSCs and has 4 Farm-out Partners
– blocks with remaining MWPs
– blocks with fulfilled MWPs
GOG exploration license blocks are valid until 2037-2038 (+ 5 years) under 5 Production Sharing Agreements (PSCs) conditional to fulfillment of Minimum Work Programs (MWP)
f a r m - o u t p a r t n e r s
49% 51%
51%
49%
50% 49% 20%
90%
10%
80%
NORIO PRODUCTION
STAGE
MARTKOPI EXPLORATION STAGE
VIII EXPLORATION STAGE
SATSKHENISI PRODUCTION STAGE
38% 62%
NORTH
SATSKHENISI EXPLORATION STAGE
CanArgo Norio Ltd.
50%
95%
95% XIF
APPRAISAL STAGE
5%
– GOG Ltd. is a BVI registered company created in 2010
– GOG acquired first licenses in April 2011 (Norio, Satskhenisi, Martkopi) from its shareholder company NOC (Norio Oil Company)
[ 12 ] Confidential
PSA Commercial Terms Flowchart
Oil and Gas Revenue
Cost Recovery
(Cost Oil)
R<1 (Cum. Entitlement Revenue /
Cum. Expense)
Profit Oil
Investor State
<=50%
>50%
50% 50%
Yes No
Profit Oil
Investor
35-40%
State
60-65%
• Commercial Discovery bonus - 5 000 000 USD • State Back in Option – 20-25% • Regulation fee – 2 USD per bbl
Note: As per PSA terms –Investors Profit tax and mineral usage tax liability is assumed and paid by the State out from the State share of Profit Oil. The state share of Profit Oil includes all taxes, levies and duties to be payable by the Contractor.
51% 49%
Frontera
Cost Recovery
Government
Pro
fit Oil 60-65% 40-35%
GOG
Cost Recovery
Government
Pro
fit Oil
• $17.6 million available for cost recovery
• $ 5.5 million Block's purchase amount
• Profit Oil:
– For VIII & XIG Block’s R≥1 -35%
– For Martkopi, XIM & XIN Block R≥1 -40%
• Exploration phase through 2032-2033
• Development held through 2042-2043
[ 13 ] Confidential
Exploration Work Done by GOG for Foreland Conventional and Shale Oil Plays in Central Georgia
Block VIII
Block XIV
Block XIA
Block XIG
Block XIM
Block XIN
X
XII
Gas potential
GOG has already carried out the following programs in its blocks:
• 655 km 2D seismic survey (ongoing)
• 3,300 km2 land gravity survey (63,000 km2 satellite)
• Geochemical studies for Maikopian, Upper Eocene and Jurassic source rocks (ongoing)
• 1 exploration well drilled in Block XIG
• Number of workovers (at least 25 wells) (shale oil)
• 2 wells with multistage frac drilled through Iskander Energy farm-out in Satskhenisi field
• 2 wells drilled in Norio field (shale oil)
• Created drilling equipment infrastructure to reduce exploration costs
Rioni Foreland
Basin
Norio
field
A T F T B SE
A
DMBLACK SEA
‒ oil fields‒ oil and gas fields‒ gas fields
Legend
Satellite gravity map
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bopd History of daily oil production in Georgia
70,000 bopd was reached from Samgori field Middle
Eocene in 1980s
History of daily oil production in Georgia from M.Eocene
(shale oil)
North Caucasus oil plays geologically are similar to Lesser Caucasus and Kura
Foreland Basin plays
[ 14 ] Confidential
VIII
XIV
XIA XIG
XIM
XIN
IX
Contingent & Prospective Resources in Block VIII
– East Kavtiskhevi prospect – 36.9 MMbbl contingent resources with potential of extension of E.Kavtiskhevi structure to the West (partially Schlumberger Block IX) and increasing resource number up to 100 MMBOE
Depth of prospects varies 3500-5500 m
South Akhalkalaki
South Borjomi
E.Kavtiskhevi
– South Akhalkalaki lead – 131 Bm3 gas prospective resources
– South Borjomi lead – 214 Bm3 gas prospective resources
[ 15 ] Confidential
900 km2 Tertiary age source rocks could generate recoverable 400 Bm3 of gas and 200 MMbbl of oil
Samgori-Patardzeuli-Ninotsminda fields
200 MMbbl produced
Formations are uplifting from East to West
Oil & Gas generation calculation for Norio area Density of Rock Avg. TOC Effective Area
of Oil Generation
Effective Area
of Gas Generation
Gross Source Rock
Thickness
Effective Source
Rock Thickness
% Type II
Kerogen
% Type III
Kerogen
Conversion of
Kerogen to Oil
Conversion of
Kerogen to Gas )
Recoverable
Amount of Oil
Recoverable
Amount of Gas
g/cm**3/1m thickness weight % km2 km2m m % % from Basin Modeling from Basin Modeling bbls m**3
Norio Kitchen 115,785,450 209,472,312,440
Maikop 2.40 1.75 250 100 1050 350 90 10 0.288 0.63 50,207,850 53,182,089,687
U.Eocene 2.40 2 250 225 2500 400 90 10 0.288 0.63 65,577,600 156,290,222,753
In Norio area 250 km2 (of these 900 km2) source rocks could generate recoverable 209 Bm3 of gas and 115 MMbbl of oil
Possible Jurassic source kitchen
VIII
XIA
XIM
XIN
XIB
IX
XIV
X
XII
[ 16 ] Confidential
Combining of Blocks XIV, VIII and IX can create up to 1400 km2 exploration acreage in two potential plays for Tertiary and Jurassic source rocks
VIII
XIA
XIM
XIN
XIC
XIB
IX
XIV
X
XII
Combining of Schlumberger Block VIII and IX can create partnership with Schlumberger
[ 17 ] Confidential
Block VIII Hydrocarbon Potential (4,800 km2), Cross-section A-A
A
A
B
B
C
C
A-A
Well defined anticlines in SW part of Block VIII were formed in L. Miocene to Pleistocene. Young structures may be identifed from surface features.
Gas Migration Condensate Migration
Borjomi #3 55 API in Turonian 670 to 1,080 m South Borjomi lead
[ 18 ] Confidential
Block VIII Hydrocarbon Potential, Cross-Section C-C
A
A
B
B
C
C
Cross-section C-C
Tertiary SRs provide light oil along strike slip faults
South Akhalkalaki lead
[ 19 ] Confidential
Block VIII Cretaceous Prospect in E.Kavtiskhevi
Lines 81406 + 15805 + 97-005
N
VIII IX E.K-2
[ 20 ] Confidential
Geological Cross-section for Cretaceous Conventional Play of East Kavtiskhevi
E.Kavtiskhevi-2
OIL
OIL TD 3400 m
New Well
New well is in 1.8 km from existing well E.K-2, which produced oil
OIL
OIL
TD 4090 m
TD 3400 m
Sarmat + M.Miocene
K1 volc.
K2 volc.
Jurassic
HC migration 34.8 API 23.8 API
38.1 API
E.K-2 well oil is Maikop Oil based on Presence of Oleanane. These oils migrated short dictance based on asphaltene Content.
Scale
E.Kavtiskhevi South Akhalkalaki
[ 21 ] Confidential
E.Kavtiskhevi Prospect Lower Cretaceous Volcanoclastics – Main Target
E.Kavtiskhevi-2
P50 OWC: 17.7 km2
Has been flowing 10-15 m3 of oil from open hole
27.3 MMbbl resources estimated in Lower Cretaceous prospect
[ 22 ] Confidential
E.Kavtiskhevi Prospect Upper Cretaceous Volcanoclastics – Secondary Target
E.Kavtiskhevi-2
P50 OWC: 10.5 km2
Has been flowing 1-3 m3 of pure oil from for 1 month
9.6 MMbbl resources estimated in Upper Cretaceous prospect
[ 23 ] Confidential
South Borjomi Leads Determined by Gustavson Associates (2013)
Prospective Rec. Res. = 103 Bm3
Prospective Rec. Res. = 111 Bm3
Lower Cretaceous, Jurassic
Lower Cretaceous, Jurassic
[ 24 ] Confidential
South Akhalkalaki Jurassic Gas Prospects in NE Part of Block VIII
77 km2
14802 14806
Line 5
D-14
D-19
Jurassic kitchen
Block VIII
Block IX
Prospective resources 131 Bm3
[ 25 ] Confidential
Seismic Lines 05 + D-19
S N
Line 14806 D-19 Line 14802
0 5km
Scale 0 5km
0 5km
[ 26 ] Confidential
South Akhalkalaki Gas Prospect and East Kavtiskhevi Oil Prospect
S N Line-05 D-19
0 5 km
Scale
200 km2 3D seismic survey (OPTIONAL)
60 km Block XIN 2D seismic lines
2018-2019 work program summary • 280 km Magnetotelluric (MT) lines • 530 km2 (+1600 km2 optional) gravity survey, • 110 km 2D seismic survey, • 200 km2 3D seismic survey (optional)
X
XIC
XIN
XIB
IX
VIII
1600 km2 Gravity survey (OPTIONAL)
280 km MT lines
30 km Block VIII 2D seismic lines
100 km2
20 km Block XIM 2D seismic line
XIM
[ 28 ] Confidential
VIII
XIA
XIM
XIN
XIC
XIB
IX
XIV
[ 29 ] Confidential
Block VIII
Block XIA Block XIG
Block XIM
Block IX
Block XIN
Oil&Gas shows in U.Eocene
Oil & Gas show in
L.Eocene
Block XIB
XIF
Oil shows in U.Eocene, Maikop and Cretaceous
Well Kav-23
Well Kav-23 oil spill
Well TLT 05GU gas flare from 200m depth Middle Eocene
Oil&Gas production in Up.
and M. Eocene
Samgori Oil fields producing from
Middle, Upper and Lower Eocene
XIC
Oil&Gas production in
Norio-Satskhenisi Maikopian
[ 30 ] Confidential
[ 31 ] Confidential
2018 work program for Blocks, VIII, IX & XIV ($ 7m)
For Northern part (up to $4m)
• 350 km Magnetotelluric (MT) lines • 530 km2 gravity survey, • 100 km 2D seismic survey, • Processing and interpretation of up to 500 km
2D seismic together with MT & Gravity data and Basin modelling
For South part ($ 3m)
• 350 km Magnetotelluric (MT) lines • 2800 km2 gravity survey, • 100 km 2D seismic survey,
[ 32 ] Confidential
2018 program capital costs $ 14m will allow to do basin modeling for Tertiary source kitchen and prove Kavtiskhevi and Norio structures with 20-30% probability
For Northern part (up to $4m)
• 350 km Magnetotelluric (MT) lines • 530 km2 gravity survey, • 100 km 2D seismic survey, • Processing and interpretation of up to 500 km
2D seismic together with MT & Gravity data and Basin modelling
For South part ($ 3.5m)
• 350 km Magnetotelluric (MT) lines • 2800 km2 gravity survey, • 100 km 2D seismic survey,
Block XIG ($ 1m)
• 300 km Magnetotelluric (MT) lines • Processing and interpretation of up
to 250 km 2D seismic together with MT & Gravity data
Block XIM & XIN ($ 4.5m)
• 500 km Magnetotelluric (MT) lines • 100 km 2D seismic survey, • Processing and interpretation of up
to 500 km 2D seismic together with MT & Gravity data
11g da VIII south 10%
[ 33 ] Confidential
Geological cross-section through Blocks XIG, XIM, XIN, VIII & IX
Secondary
décollement at
the base of Eocene sequen
ce
JKX97-001
Block XI m Block XI g Block XI c Block XI D + XIII Block IX
Middle Maikop
U.Maikop
Maikop Source rock
M.Eocene reservoir
Paleocene + L.Eocene Cretaceous
NOR72
VKT14 DDL01 VKT05
NOR38 LLB-01
Oligocene
1000
0
-1000
-2000
-3000
-4000
-5000
-6000
-7000
-8000
Blocks XIM-XIN Deep Norio structure
U.Eocene Source rock
OIL TD 3400 m
OIL
Sarmat + M.Miocene
K1 volc.
K2 volc. Jurassic
OIL
North of Block VIII E.Kavtiskhevi structure with contingent resources
Blocks XIG Teleti prospect
Georgia XIA line 11 Georgia-XIG-1404
• Thin-skinned structures (fault-bend faults) related to a detachment level within the Lower Cretaceous strata, vergent to the north.
• This main décollement may involve some Jurassic strata too. However, no Jurassic strata outcrop in surface in this area (Lesser Caucasus). In consequence, we consider that Jurassic strata are mainly located in the deepest part of the section.
• Possible reactivation of faults involved in former extensive periods.
• In the Kura Basin (Syncline), there is a south-vergent thrust structure, with basal Middle Miocene détachment.
• Here, main structures are less uplifted than in the western section.
Unconformity and possible pinchouts
[ 34 ] Confidential
All analyses show that oils are Tertiary oils from Uplistsikhe Gori to Vedzebi and from Vedzebi to Samgori
[ 35 ] Confidential
GOG’s Forward Looking Exploration Program
4-stage exploration program:
1) Combined study of existing data in GOG blocks (XIG, XIM, XIN, VIII) and adjoining blocks (XIB, XIC, IX)
2) Run Airborne gravity survey and 2D seismic surveys to clearly identify the leads and prospects based on results of Stage 1
3) Run 3D seismic surveys based on results of Stage 2
4) Design and execute drilling programs
VIII
XIV
XIA
XII
XIM
XIN
XIC
XIB
IX
XIG
GOG is looking for partners who may assist us to unearth the huge hydrocarbon potential in Georgia
[ 36 ] Confidential
Geology & Tectonics of Georgia &
GOG’s Blocks
Dr. M. Arif Yukler
[ 37 ] Confidential
Conventional Prospective Resources within GOG Blocks and Neighbors
Prospects
Leads
VIII
XIV
XIA XIG
XII
XIM
XIN
XIC
XIB
IX
– Oil fields
Total oil resources – 1,018 MMbbl Total gas resources – 549 Bm3
1
9
8
6
7
11
12
13
5
3
2 4
Block Prospect Formation Prospective resources
VIII 1. East Kavtiskhevi K1, K2 36.9 MMbbl
XIM, XIC 2. Norio deep M.Eocene 222.4 MMbbl
XIM, XIC 3. Norio U.Eocene 114.3 MMbbl
XIM, XIC 4. Norio Oligocene 209.7 MMbbl
XIM 5. Samgori-Varketili Oligocene 158.5 MMbbl
XIG 6. Teleti Paleocene, K2 105 Bm3
Total oil in prospects 741.8 MMbbl
Total gas in prospects 105 Bm3
Block Lead Formation Prospective resources
XIG, XIB 7. Tabori-Varketili Paleocene, K2 60 Bm3
VIII 8. South Borjomi K1, Jurassic 214 Bm3
VIII 9. South Akhalkalaki Jurassic 131 Bm3
XIM 10. Mtskheta K1 39 Bm3
XIN 11. Saguramo M.Eocene 69.8 MMbbl
XIN 12. Trani M.Miocene 108.7 MMbbl
XIN 13. Ertso Cretaceous 97.5 MMbbl
Total oil in leads 276 MMbbl
Total gas in leads 444 Bm3
10
Depth of prospects varies 3500-5500 m
Additional 3rd party reports available for blocks XIA, XIM, XIN, XIG, VIII, XIC, XID and XIE
7
5 – Prospects and leads with Maikop and U.Eocene source rock
– Prospects and leads with Jurassic source rock
– Gas field
Shale oil & Shale gas resource studies are ongoing
[ 38 ] Confidential
Oil & Gas Prospective Reserves/Resources of GOG’s Blocks & Neighbours
Third Party Reserve Reports (Gas), Conventional Recoverable Pros. No reserve reports exist for gas
CONVENTIONAL GAS EXPLORATION EFFICIENCY = 0.01%
Jurassic Kitchen Tertiary Kitchen (Maikop + U. Eocene)
Tertiary Kitchen Prospective Conventional Oil 16.10 Bbbls (4.83 Bbbls rec.) Prospective Conventional Gas 7.05 Tm3 (4.23 Tm3 rec.) Recoverable Prospective Shale Oil 7.11Bbbls Recoverable Prospective Shale Gas 1.31 Tm3
Third Party Reserve Reports (Oil), Conventional Recoverable Pros. Block XII – 118 MMbbls (NSAI) Samgori & Patarzauri & South Dome – 223.8 MMbbls Ninotsminda – 8.3 MMbbls (P1+P2)
CONVENTIONAL OIL EXPLORATION EFFICIENCY = 7%
Jurassic Kitchen Prospective Conventional Oil 769.5 MMbbls (230.9 MMbbls rec.) Prospective Conventional Gas 3.44 Tm3 (2.41 Tm3 rec.) Recoverable Prospective Shale Oil 1.09 Bbbls Recoverable Prospective Shale Gas 1.27 Tm3
Western Kitchen is under study
Land
[ 39 ] Confidential
Stratigraphic Chart
[ 40 ] Confidential
Regional Tectonic Elements from Black Sea to the Caspian Sea
from Adamia et al, 2011
Block VIII
[ 41 ] Confidential
Georgia from Gondwana to Eastern Europe
from Adamia et al, 2011
Great Caucasus Transcaucasian Micro-continent
[ 42 ] Confidential
Tectonic Evolution of GOG Blocks from E. Jurassic to L. Bathonian
From D. Vakhania et al, 2009
E. Jur – Aal.
L. Aal. – E. Baj.
Baj. – Bath.
[ 43 ] Confidential
Jurassic Deposition Environment
from M. Bochud, 2011
[ 44 ] Confidential
m
During the late Bathonian Blocks VIa and VIb were uplifted cutting the connection to the sea except along narrow channels to the west and north-west. Coals and organic matter rich shales were deposited in marshy and lagoonal environment.
TYPE III
TYPE II
W E
U. Bathonian Deposition Environment
[ 45 ] Confidential
From Barrier & Vrielynck, 2008
E. Cretaceous Deposition Environment
[ 46 ] Confidential
from M. Bochud, 2011
Cretaceous Deposition Environment
[ 47 ] Confidential
from M. Bochud, 2011
Tertiary Deposition Environment
[ 48 ] Confidential
Pre-Jurassic Basement Faults of Georgia Based on Refractive Seismic Data
Dzruli
Khrami
Loki
[ 49 ] Confidential
Pre-Jurassic Basement Faults & Satellite Gravity Map
[ 50 ] Confidential
Jurassic Basement Topography of South Caspian
Green et al, 2009
Jurassic Basement Topography
Faulted on both sides
Similar basement movements occur İn Georgia that control sedimentation Since the Early Jurassic
[ 51 ] Confidential
Regional Topographic Map & Tectonic Zones of Georgia
Uplift system of Greater Caucasus anticlinorium
Folded system of Greater Caucasus
Rioni intermontain depression
Imereti folded Intermontain zone
Kartli - W. Kura depression
Adjara Trialeti folded sytem of Lesser Caucasus
South Georgia folded zone of Lesser Caucasus A
B
A B
[ 52 ] Confidential
Greater Caucasus and Adjara-Trialet Orogenic Systems
Folds
Strike-Slip Faults
From M. Nemcok, 2005
[ 53 ] Confidential
Colliding Thrust Systems near Mtskheta
From M. Nemcok, 2005
[ 54 ] Confidential
Colliding Thrust Systems near Mtskheta
Maykop
Lesser Caucasus
(Trialeti Zone) thrust system Greater Caucasus thrust system
N S Collusion
[ 55 ] Confidential
Achara-Trialeti Thrust Belt (GOG Exploration Area)
Achara-Trialeti Belt and the Kura Fold-Thrust Belt are found between the opposing orogens of the Greater and Lesser Caucasus orogenic systems.
Present tectonics are seen as a continuation of Neogene shortening of the Kura Basin resulting from northward motion of the Arabian plate relative to the stable Eurasian Plate.
[ 56 ] Confidential
Georgia Oil & Gas Prospectivity Map
Proven prospective
Proven prospective Prospective Possibly prospective Limited prospectivity
Basement at or close to surface
[ 57 ] Confidential
Tectonic Framework from the Arabian to Scythian Platform
Kocyigit et al., 2001
Block VIII
Block VIII experienced first folding as the result of the compression from the south and later faulting
[ 58 ] Confidential
Vertical Movements as the Result of Compression, L. Miocene to Recent
From Mosar et al., 2010
[ 59 ] Confidential
Source Rocks, Hydrocarbon Generation
Histories & Reservoirs in GOG’s Blocks &
Kura Basin
[ 60 ] Confidential
Source Rocks of Caspian Region
-U. Frasnian bitum. carb. -Visean bitum.
carb. -Serpukhovian
algal ls -Bashkirian algal
ls -Muscovian algal
bitum. ls -U. Triass. and L. Jur. coally and algal
shales
L.-M. Jur,
Oxf.-Kimm.
Alb.-Apt
bitum. sh
Bath.-Bajoc.
Alb.-Apt.
U. Eocene
Maikop
Maikop U. Eocene
Miocene U. Cret. Toarcian, (Georgia)
[ 61 ] Confidential
Heat Flow Distribution in Kura Basin
Heat flow increase away from the G. Caucasus indicate active water flow
KURA BASIN
[ 62 ] Confidential
Effects of Late Water Circulation in Dagestan Area
Maykop oils with minor changes in depositional environment
Lack of maturity trend between 3,000 to 6,000 m indicate active water circulation.
[ 63 ] Confidential
Main Source Rocks of Georgia and GOG Blocks
Comprised of mainly marine OM, Type II, with TOC values of 0.5- 2.8% (1.75% was used for modeling)
Comprised of mostly marine organic matter, Type II, with terrestrial input with TOC values of 0.5-11% (1.75% was used for modeling)
Comprised of marine OM, Type II, with TOC values of 1.3-10.0% (2% was used for modeling)
TOC = 0.5 – 1.0%, Type II
[ 64 ] Confidential
Toarcian Source Rock Distribution
Toarcian source rock TOC value ranges from 0.5 to 2.8% and comprised mainly of Type II kerogen. Currently in immature to over mature HC generation phase based on burial depths. One of the main HC sources in Block VIA, VIB and VIII.
Frm Papava, 1976
[ 65 ] Confidential
Jurassic Potential of Georgia
Good Proven Potential Low Accumulation
Potential
High Potential to be Explored
Low Potential Based on Generation
Papava, 1991
[ 66 ] Confidential
Jurassic Potential & Satellite Gravity Map
[ 67 ] Confidential
Isopach Map of Maikop Source Rock
Tethys Oil Company, 2013
[ 68 ] Confidential
Maikop Source Rock Distribution in Central and Eastern Georgia
There are 2 major kitchens where oil and gas have been generated in Maikop source rocks. TOC of Maykop ranges from 0.2 to 11 % Type II kerogen with abundant terrestrial OM to the south and north. At present Maikop is in early oil generation to late gas generation phase.
[ 69 ] Confidential
Hydrocarbon Generation vs Depth
Shah Deniz (Azerbaijan)
Chiraq (Azerbaijan)
Goturtepe (Turkmenistan)
West Kura (Georgia)
[ 70 ] Confidential
Hydrocarbon Generation History of Maikop Source Rock
Shah Deniz (Azerbaijan)
Chiraq (Azerbaijan)
Goturtepe (Turkmenistan)
West Kura (Georgia)
+
Near Top Near Base
[ 71 ] Confidential
Shah Deniz Structure Map
Reservoir Pres. = 14000 psi (952 atm)
AIOC, 2013
[ 72 ] Confidential
Shah Deniz Gas Transportation
With Phase II completion production will be 16 Bm**3, 6 Bm**3 to Turkey and 10 Bm**3 to Europe. Phase I produced ci. 50,000 bbls of condensate per day. Discovery date: 1999, Production Start: 2006, Reserves: 1.2 Tm**3, Water Depths: 50-600 m.
AIOC, 2013
[ 73 ] Confidential
Oil Densities of Producing Oil Fields (Tertiary Oils)
20
24-34 27-35
30-40 27 23-38
30 39
38-42
30-55
35-47
35-40
Fields 4. Norio 5. Satskhenisi 6. Samgori-Patarzeuli-Ninotsminda 7. Samgori South Dome 8. Teleti 9. West Rustavi 10. Mtsarekhevi 11. Baida 12. Taribani 13. Mirzaani 14. Patara Shiraki 15. Nazarlebi 16. Rustavi 17. Samgori 18. Ninotsminda 19. Akhalkalaki
24-34 API Gravity
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
197
0
197
2
197
4
197
6
197
8
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
bopd History of daily oil production in Georgia
70,000 bopd was reached from Samgori field Middle
Eocene in 1980s
39
19
37
[ 74 ] Confidential
Geochemical Characterization of Oil Samples
Tethys Oil Company, 2013
[ 75 ] Confidential
Present Hydrocarbon Generation Phases in Toarcian Source Rock
Toarcian Oil Seeps 20-27 API
Toarcian Gas with Condensate in Borjomi #3. 51.55 API
Maikop? Gas
Maikop? Gas
Maikop/ Toarcian Gas
[ 76 ] Confidential
Hydrocarbon Generation History of Toarcian Source Rock
Oil generated and expelled in Aptian
Oil generated and expelled in Barremian
Active wet gas generation & expulsion with condensate
Dry gas Gen. Migr.
Western part of Block VIII is more gas prospective due to late wet gas generation and expulsion
[ 77 ] Confidential
Gas Composition & Gas Production of K-1 Well
[ 78 ] Confidential
Gas Composition of K-1 Well & Vented Gases from the Coal Mine
K-1 well missed the coal due to normal faulting and produced gas for about 30 years from the underlying Upper Bajocian volcano-clastics. The presence of C3H8 and C4H10 indicates conventional gas contribution from the Lower Jurassic (Toarcian) source rock.
[ 79 ] Confidential
Toarcian Light Oil Production in Okumi Field
OKUMI FIELD
40 – 50 API from Toarcian source rock
[ 80 ] Confidential
Main Reservoir Rocks of GOG Blocks
Aalenian ss Albian ls fractured Middle Eocene volcano- Clastics fractured
Maikop ss coarse to fine grained
Campanian- Maastrichtian ls fractured
Upper Eocene sands and silts
[ 81 ] Confidential
Main Seals of GOG Blocks
Lower Eocene shales Maikop shales Albian/Aptian shales Aalenian shales U.Eocene shales Paleocene shales
[ 82 ] Confidential
Trap Types & Hydrocarbon Potential in
GOG’s Blocks
[ 83 ] Confidential
Hydrocarbon Trap Types in Georgia
Anticline (to be explored for M.Eocene deep Norio structure and for M.Miocene in Block XIN)
Fault Trap (to be explored in Block VIII, XIM Mtskheta lead and Norio U.Eocene)
Unconformity Trap (Mtsarekhevi Field, Block XII)
Sandstone Pinchout (to be explored for Uplistsikhe Maikop sandstones)
Thrust Fault Trap (to be explored in Norio and XIN)
Tethys Oil Company, 2013
[ 84 ] Confidential
Samgori Field, Discovered in 1974
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
197
0
197
2
197
4
197
6
197
8
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6bopd History of daily oil production in Georgia
70,000 bopd was reached from Samgori field Middle
Eocene in 1980s
Samgori-Patardzeuli Together - M. Eoc. = 22.5 MMt - U. Eoc. = 46.6 Kt - M. Eoc. = 2.1 Bm3
- U. Eoc. = 1.2 MMm3
39 API 38 - 42 API Asph. 0.03 – 1.5
[ 85 ] Confidential
Patardzeuli Field, Discovered in 1974
Asph. 0.7 – 5.77 39 API
Samgori-Patardzeuli Together - M. Eoc. = 22,5 MMt - U. Eoc. = 46.6 Kt - M. Eoc. = 2.1 Bm3
- U. Eoc. = 1.2 MMm3
[ 86 ] Confidential
Norio shallow Field (M.Miocene), Discovered in 1939
30 API
Hole lost
Norio - Oli.-L.Mio = 10.5 kt - M. Mio. = 256.0 kt - U. Mio. = 5.3 kt
1.86 MMbbls of oil has been produced
Asph. 0.3%
Deep M.Eocene prospect. Analog to Samgori field
?
[ 87 ] Confidential
Ninotsminda Field, Discovered in 1979
34 API
Asph. 1.2%
Ninotsminda - Paleocene = 0.04 kt - M. Eoc. = 1.58 MMt - U. Eoc. = 71.6 Kt - U. Mio. = 2.3 Kt
Analog to Manavi discovery
[ 88 ] Confidential
Block VIII
[ 89 ] Confidential
Block XIF
[ 90 ] Confidential
Block XIF (37.7 km2) Hydrocarbon Potential, West Rustavi Field Cross-sections
35 API
[ 91 ] Confidential
W. Rustavi Field Structure Map and Recoverable Reserves
30
L.Eocene
U.Cretaceous
[ 92 ] Confidential
Block XIG
[ 93 ] Confidential
Hydrocarbon Potential of Block XIG, Gustavson Associates, 2014
Schlumberger gas well for Lower Eocene
(plan first half of 2018)
Recoverable Resources by Irakli Tavdumadze 1. Teleti prospect - U. Cretaceous = 57.8 Bm3
- Paleocene = 47.3 Bm3
2 Tabori-Varketili lead - U. Cretaceous = 36.6 Bm3
- Paleocene = 23.2 Bm3
Existing oil fields
Gas field
0 5km
[ 94 ] Confidential
Block XIG (300 km2) Hydrocarbon Potential, Teleti Structure
Recoverable Resources Irakli Tavdumadze - U. Cretaceous = 57.8 Bm3
- Paleocene = 47.3 Bm3
Hole lost, but abundant gas shows during drilling
[ 95 ] Confidential
Block XIG Hydrocarbon Potential, Teleti Structure
Well #11 tested C1 at 200K m3
per day.
Potential Gas Accumulation
[ 96 ] Confidential
Block XIM and Possible Participation in Blocks XIC & XIB
[ 97 ] Confidential
Excellent depth and temperature
for maturity
NOR38 DDL1
VKT03 VKT02 VKT06 VKT05
U.Maikop
M.Maikop
U.Eocene
M. Eocene
L. Eocene
Cretaceous
Source rock
Chokrak
Sarmat
Source rock
NOR72
Oil in well NOR38 proves existence of oil
kitchen in U.Eocene
Oil in well NOR72
Oligocene
Oil field in Satskhenisi Maikop
Oil field in Norio Chokrak
Norio
frac
frac
frac
Proposed well
XIM XIB
600
-3200
-4200
0
-1000
Oligocene
Mature Oligocene and U.Eocene source rocks on the surface
Continuation of Samgori -5000
Gas show in Cretaceous
Oil in well NTM78
Oligocene
S N
Block XIM (350 km2) Hydrocarbon Potential, Ormoiani Syncline & Norio
0 1 2km Scale
[ 98 ] Confidential
Norio XIM
NOR72 XIB S N
VKT14
MKP3
MKP2
MKP1
Upper Eocene
Middle Eocene
1 2 3 4 5
Chokrak
GOG Line 15 CanArgo Line L3007
M.Eocene deep Norio prospect
Block IXM Shale Oil Potential of Ormoiani Syncline & Norio-Satskhenisi
Rod Christensen, 2012, Report on Shale Oil Resources ORMOIANI In Maikop - Thickness = 2,000 m, Area 350 km**2 TOC = 5%, HI = 300 mgHC/g TOC - Oil in Place Resources = 110.3 Bbbls Recoverable Oil Res. = 4.4 Bbbls In U. Eocene - Thickness = 1,900 m Area = 350 km**2 - TOC = 2%, HI = 211 mg HC/g TOC - Oil in Place Resources = 12.5 Bbbls Recoverable Oil Res. = 0.5 Bbbls
NORIO-SATSKHENISI In Maikop - Thickness = 1,500 m, Area 75 km**2 TOC = 5%, HI = 300 mgHC/g TOC - Oil in Place Resources = 17.7 Bbbls Recoverable Oil Res. = 708 MMbbls In U. Eocene - Thickness = 2,100 m Area = 75 km**2 - TOC = 2%, HI = 211 mg HC/g TOC - Oil in Place Resources = 5.6 Bbbls Recoverable Oil Res. = 224 MMbbls
300 m Maikop Sandstones outcrop in Uplistsikhe area
About 100 m thick Maikop sandstones
E
XIM
VIII
– –
– – – –
– –
– – – – –
–
–
–
W
0 2km
Scale
XIN
IX
XIC
[ 99 ] Confidential
Norio Deep M.Eocene Prospect
MNorio(NSAI)(Prospective Resources)
Kavtiskhevi-Khandaki-Mamkoda(Prospective Resources)
Line 3007DGC 0002
Prospective resources 222 MMbbls (NSAI)
Line 3007
GOG is considering participation in development of the prospect with CanArgo
0 5km Scale
0 1km Scale
[ 100 ] Confidential
Norio Upper Eocene Prospect
Structural map on top of Upper Eocene
Norio((Prospective Resources)
Line 3005
NOR38Line 3005
Prospective resources 114.3 MMbbls
0 5km Scale
0 1km Scale
[ 101 ] Confidential
Norio Oligocene prospect
Mamkoda(Prospective Resources)
Norio(Prospective Resources_NSAI)
Structural map on top of Oligocene
Samgori-Varketili(Prospective Resources)
NTM78
GOG is considering participation in development of the prospect with Schlumberger in Block XIB
Prospective resources 209.7 MMbbl
0 5km Scale
0 5km Scale
[ 102 ] Confidential
Mtskheta Lower Cretaceous Lead
50 km2
Prospective resources 39 Bm3
S N
Oligocene
U.Eocene
Maikop
K2
K1
J
S N Line-11 JKX 97-001
JKX
97
-00
1
0 5 km
Scale
0 5 km
Scale
[ 103 ] Confidential
Block XIN
[ 104 ] Confidential
Block XIN (290 km2) Hydrocarbon Potential
Only available data for Block XIN is land gravity survey and number of shallow (300 m) wells, which gives understanding of surface geology
Potential M.Miocene
target
Potential Cretaceous
target
XIN XIN
XIN
Norio oil field in M.Miocene
(in 10 km)
Saguramo M.Eocene target Coninuation of Norio deep M.Eocene (National park)
Scale
XIM XIM
XIM
Norio Norio
Norio
XIC XIC
XIC
[ 105 ] Confidential
Block XIN Structural Interpretations
Ninotsminda - Tetri Tsklebi cross-section
Play I Play II
Cross-section A-B Play I – Ramp anticline play (L.
Sarmatian - Chokrakian)
Play II – Ramp anticline play
(Cretaceous, M. Eocene)
Shale oil play for Upper Eocene and
Maikopian
Geological cross-section A-B (model 2a)
Analog Cretaceous structure in Manavi discovery (in 25 km from XIN)
There is a chance to have Gas field in this block too, because it sits on deep Maikop and U.Eocene kitchen
[ 106 ] Confidential
Block XIN (290 km2) Oil Potential, Saguramo (M. Miocene), Trani (M.Miocene) and Ertso (Cretaceous) Leads
Ertso 16 × 2 km Cretaceous Ertso (97.5 MMbbls)
Trani 10 × 3 km M.Miocene lead (108.7 MMbbls)
Saguramo 10 × 2.5 km M.Eocene lead (69.8 MMbbls)
[ 107 ] Confidential
XII
XIa
Georgian research Group
Frontera
Questerre
1. Robertson Research International Llandudno Czuynedd, United Kingdom – Western Georgia, South-East Georgia –Kavtiskhevi area and Kartli basin) (A. Robinson et al., 1996).
2. Frontera East Georgia Ltd – Hydrocarbon Geochemical Analysis - XII License Block (2005).
3. Questerre Energy (Preliminary Lab. Work for Identification of Kerogen Type within XIa License Block and Norio-Satskhenisi Area During 2011).
4. Georgian Research Group – South-east Georgia (Samgori, Patardzeuli, Martkopi, Manavi Area). Report: I. Tavdumadze et al., 2012.
5. Rod Christensen - Shale Oil Potential: Georgia Oil and Gas Limited, 2012
6. M. Arif Yukler – Hydrocarbon Potential of Block VIII, 2014
7. Gustavson and Associates – Independent Resource report for Blocks VIII and XIG, 2014
8. Gustavson and Associates – Independent Resource report for Blocks XIA, XIM, and XIN, 2013
Robertson
Rod Christensen
Studies Available Around GOG Licenses
[ 108 ] Confidential
GOG Forward Exploration Program
[ 109 ] Confidential
Forward Exploration Planning, Study Stage
STUDY STAGE Geophysics - Seismic reprocessing and reinterpretation - Gravity analysis - Seismic acquisition planning - Additional gravity acquisition planning Engineering - Determine reservoir characteristics - Recompute charges and production potential of the proposed prospects and leads - Determine IPs for all trap types - Determine decline rates for all trap types - Prepare well designs (vertical, deviated and horizontal) - Prepare AFEs for all well designs - Prepare surface facility designs - OPEX and CAPEX calculations - Full economics of operations
Quantitative Basin Evaluation - Complete basin modeling of the kitchens - Determine timing of generation and migration of HCs - Determine the most suitable traps, reservoirs and seals - Develop tectonic models over the kitchens - Determine reservoir temperatures and pressures Data Base Reorganization - Cataloging of all data sets - Increase speed to access data in an Arc GIS system